Feds See ‘Grim’ Delays, Overruns on Second Ave. Subway, East Side Access

For months, the M.T.A. and the Federal Transit Administration had been at odds over cost overruns of the M.T.A.’s two biggest projects: the long-planned Second Avenue Subway and East Side Access, which would bring the Long Island Rail Road to Grand Central. The F.T.A., which is partially funding both, had argued the projects were running up to $1.6 billion over what the M.T.A. was projecting, and the projects would be further delayed, both into 2018. The M.T.A. begged to differ.

Now, it seems the two agencies have reached an accord, as the M.T.A. is officially acknowledging those risks, posited by the F.T.A., of a set of overruns and delays—and it’s not incredibly pretty.

By these estimates, the Second Avenue Subway is now estimated to cost $4.98 billion, another $307 million beyond the numbers the M.T.A. had been working off, with completion in February 2018, up from December 2016. East Side Access is now at $8.1 billion, up $328 million, with completion in April 2018, up from September 2016. (At the same time, the M.T.A. still says that it believes it can bring the projects in below these numbers and on its schedule.)

In a letter sent last month to the Senate Banking, Housing and Urban Affairs committee, F.T.A. administrator Peter Rogoff wrote that the estimates were “grim.”

We all recognize the enormous mobility improvements these two mega-projects will bring to the Nation’s largest metropolitan area. Clearly, however, the news regarding the cost overruns and schedule delays is grim.

…

M.T.A. maintains that it can deliver these projects sooner and at lower costs than F.T.A. currently estimates. I certainly hope M.T.A. succeeds. But F.T.A. believes it is prudent and appropriate to formally amend the FFGAs [Full funding grant agreements] to reflect the results of F.T.A.’s current risk analyses.”

Mr. Rogoff also placed blame on rising construction costs, particularly in New York, but also on problems at the M.T.A.:

Key management positions overseeing these projects remained vacant for months. There were lengthy delays in awarding contracts, due to changes in both design and procurement strategies.

All told, the situation involving East Side Access and the Second Avenue Subway tells a story that is all too frequent with giant public sector projects. The projects were approved and sold to the public with one price tag, only to see the budget prove far too insignificant (very rarely, if ever, do projects come in well below their initial projections). And once a project has started—once the foot is in the door—it becomes really difficult to pull the plug, even if the public would never have signed onto the initial price tag.

In this case, the Second Avenue Subway was initially supposed to be $4.1 billion, with completion slated for June 2014; East Side Access was budgeted at $6.3 billion, to be finished in December 2013.

With regard to these projects, M.T.A. spokesman Jeremy Soffin said the agency would work toward the existing budget, which it views as attainable. “We have a budget and a time line that we’re working toward and we plan to meet,” he said. “Both we and the F.T.A. acknowledge that here’s risk inherent in these projects.”

(The M.T.A. included the F.T.A. estimates in its capital plan released in April, though it mostly went unnoticed. The capital plan says “with the appropriate mitigations, the projects can be delivered within the identified budget ranges.”)

Just where to get the extra money, should it be needed, is a big question for the cash-poor agency. Its fund for capital projects, repairs and renovations effectively runs dry at the end of 2011, and the agency is expecting to make a press to raise the billions needed to fill the gap.

“Obviously we’re concerned about these cost overruns and delays and we would certainly want to hear and get an accounting from the M.T.A.,” said Robert Gottheim, a spokesman for Representative Jerry Nadler, the Manhattan Democrat. “This is significant money that both projects are now going to cost, and significantly behind schedule.”